ok, i guess its oil & inflation related. just didnt expect such a sharp turnaround
European Stocks Fall, Led by Carmakers; U.S. Futures Decline
By Adria Cimino
May 21 (Bloomberg) -- European stocks fell for a second day after oil breached $130 a barrel, stoking concern higher fuel costs will curb profits for carmakers and airlines. U.S. index futures and shares in Asia retreated.
Porsche SE led automakers lower after Merrill Lynch & Co. recommended selling shares of the maker of the 911 sports car on concern over rising raw-material costs. Ryanair Holdings Plc, Europe's biggest discount airline, and Air France-KLM Group fell as oil climbed as high as to $130.47 a barrel.
Europe's Dow Jones Stoxx 600 Index lost 0.7 percent to 323.72 at 11:40 a.m. in London, reversing earlier gains of as much as 0.3 percent. Futures on the Standard & Poor's 500 Index slipped 0.2 percent. The MSCI Asia Pacific Index decreased 1.1 percent.
``Oil at $130 is worrisome,'' said Guillaume Duchesne, a Geneva-based strategist at Fortis Private Banking, which oversees the equivalent of $117 billion. ``What bothers us is the evolution of corporate profits. It's a problem for margins and that hurts sentiment.''
Oil's surge to a record, a report on U.S. producer prices that indicated a pickup in inflation and forecasts for more credit losses from analysts yesterday pushed the S&P 500 down from a four-month high and sent the Stoxx 600 to its biggest slump since March.
The MSCI World Index has fallen 8.1 percent from an October record on concern higher fuel costs and $381 billion in credit losses will curb earnings.
Oil rose above $130 a barrel for the first time after at least five banks raised price forecasts in the past week on expectations supply constraints will persist.
Porsche Downgrade
Porsche, the maker of the 911 sports car, dropped 4.6 percent to 122.38 euros. Nokian Renkaat Oyj, the Nordic region's biggest tiremaker, slid 1.3 percent to 30.92 euros.
Merrill cut its recommendation on Porsche and Nokian to ``sell'' from ``neutral.'' The firm also lowered its share-price estimates on Renault SA and Continental AG.
``Steel and oil prices keep going up,'' analysts including Thomas Besson wrote in a research note dated today. ``Our new 2009 earnings-per-share estimates are sharply lower than consensus for European automakers.''
Renault, France's second-biggest carmaker, fell 3.1 percent to 64.89 euros, while Continental slid 2.8 percent to 79.21 euros.
Crude oil for July delivery gained as much as $1.21 to $130.28 in electronic trading on the New York Mercantile Exchange.
Ryanair lost 3.8 percent to 2.65 euros. Air France, Europe's biggest airline, slid 2.2 percent to 18.91 euros.
